XML 37 R22.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

Note 14. Income Taxes

Income tax expense (benefit) included in net income consisted of the following components:

 

 

 

Years Ended December 31,

 

(in thousands)

 

2021

 

 

2020

 

 

2019

 

Included in net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current federal

 

$

 

86,858

 

 

$

 

(58,723

)

 

$

 

12,172

 

Current state

 

 

 

7,607

 

 

 

 

(132

)

 

 

 

6,087

 

Total current provision

 

 

 

94,465

 

 

 

 

(58,855

)

 

 

 

18,259

 

Deferred federal

 

 

 

7,035

 

 

 

 

(17,000

)

 

 

 

46,290

 

Deferred state

 

 

 

3,341

 

 

 

 

(3,716

)

 

 

 

810

 

Total deferred provision

 

 

 

10,376

 

 

 

 

(20,716

)

 

 

 

47,100

 

Total expense (benefit) included in net income

 

$

 

104,841

 

 

$

 

(79,571

)

 

$

 

65,359

 

 

Income tax expense (benefit) does not reflect the tax effects of amounts recognized in other comprehensive income and in AOCI, a separate component of stockholders’ equity.  These amounts include unrealized gains and losses on securities available for sale or transferred to held to maturity, unrealized gains and losses on derivatives and hedging transactions, and valuation adjustments of defined benefit and other post-retirement benefit plans. Refer to Note 12 – Stockholders’ Equity for additional information.

 

Temporary differences arise between the tax bases of assets or liabilities and their carrying amounts for financial reporting purposes. The expected tax effects from when these differences are resolved are recorded currently as deferred tax assets or liabilities.

 

 

Significant components of the Company’s deferred tax assets and liabilities were as follows:

 

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

 

85,118

 

 

$

 

111,170

 

Loan purchase accounting adjustments

 

 

 

1,838

 

 

 

 

1,681

 

Tax credit carryforward

 

 

 

2,326

 

 

 

 

5,700

 

Federal/state net operating loss

 

 

 

3,646

 

 

 

 

4,462

 

Lease liability

 

 

 

27,553

 

 

 

 

29,352

 

Other

 

 

 

9,704

 

 

 

 

17,801

 

Gross deferred tax assets

 

 

 

130,185

 

 

 

 

170,166

 

State valuation allowance

 

 

 

(3,646

)

 

 

 

(3,635

)

Net deferred tax assets

 

$

 

126,539

 

 

$

 

166,531

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

$

 

(11,137

)

 

$

 

(10,044

)

Securities

 

 

 

(5,389

)

 

 

 

(51,036

)

Fixed assets & intangibles

 

 

 

(34,475

)

 

 

 

(46,762

)

Lease Financing

 

 

 

(54,127

)

 

 

 

(54,581

)

Right-of-use Asset

 

 

 

(23,075

)

 

 

 

(24,872

)

Other

 

 

 

(17,770

)

 

 

 

(28,642

)

Gross deferred tax liabilities

 

$

 

(145,973

)

 

$

 

(215,937

)

Net deferred tax liability

 

$

 

(19,434

)

 

$

 

(49,406

)

 

Reported income tax expense (benefit) differed from amounts computed by applying the statutory income tax rate of 21% for the years ended December 31, 2021, 2020 and 2019 to earnings or loss before income taxes. Historically, the primary differences have been due to tax-exempt income, federal and state tax credits and excess tax benefits from stock-based compensation. The year ended December 31, 2020 includes an incremental 14% tax benefit totaling $30.2 million associated with the five-year carryback of both the 2020 net operating loss (“NOL”) and the NOL attribute inherited from an acquired entity to a 35% statutory rate tax year, as allowed by provisions of the CARES Act. In addition, the 2021 effective tax rate was favorably impacted by a $4.9 million benefit associated with changing certain fixed asset tax elections that resulted in an increase in the 2020 NOL. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets we serve and directed at tax credits issued under the Qualified Zone Academy Bonds (“QZAB”), Qualified School Construction Bonds (“QSCB”), as well as Federal and State New Market Tax Credit (“NMTC”) and Low-Income Housing Tax Credit (“LIHTC”) programs.  A summary of the factors that impacted income tax expense follows.  

 

 

 

Years Ended December 31,

 

 

2021

 

2020

 

2019

 

 

($ in thousands)

 

Amount

 

 

%

 

 

 

Amount

 

 

%

 

 

 

Amount

 

 

%

 

 

Taxes computed at statutory rate

 

$

 

119,292

 

 

 

21.0

 

%

 

$

 

(26,196

)

 

 

21.0

 

%

 

$

 

82,475

 

 

 

21.0

 

%

Increases (decreases) in taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State income taxes, net of federal income tax benefit

 

 

 

9,048

 

 

 

1.6

 

 

 

 

 

(1,269

)

 

 

1.0

 

 

 

 

 

7,204

 

 

 

1.8

 

 

Tax-exempt interest

 

 

 

(9,100

)

 

 

(1.6

)

 

 

 

 

(10,444

)

 

 

8.4

 

 

 

 

 

(10,435

)

 

 

(2.7

)

 

Life insurance contracts

 

 

 

(2,653

)

 

 

(0.5

)

 

 

 

 

(4,857

)

 

 

3.9

 

 

 

 

 

(3,901

)

 

 

(1.0

)

 

Tax credits

 

 

 

(7,889

)

 

 

(1.4

)

 

 

 

 

(8,072

)

 

 

6.5

 

 

 

 

 

(10,293

)

 

 

(2.6

)

 

Employee share-based compensation

 

 

 

(1,671

)

 

 

(0.3

)

 

 

 

 

1,351

 

 

 

(1.1

)

 

 

 

 

(842

)

 

 

(0.2

)

 

FDIC assessment disallowance

 

 

 

1,609

 

 

 

0.3

 

 

 

 

 

2,094

 

 

 

(1.7

)

 

 

 

 

1,895

 

 

 

0.5

 

 

Net operating loss carryback under CARES act

 

 

 

(4,948

)

 

 

(0.9

)

 

 

 

 

(30,167

)

 

 

24.2

 

 

 

 

 

—

 

 

 

—

 

 

Other, net

 

 

 

1,153

 

 

 

0.3

 

 

 

 

 

(2,011

)

 

 

1.6

 

 

 

 

 

(744

)

 

 

(0.2

)

 

Income tax expense (benefit)

 

$

 

104,841

 

 

 

18.5

 

%

 

$

 

(79,571

)

 

 

63.8

 

%

 

$

 

65,359

 

 

 

16.6

 

%

 

At December 31, 2021, the Company had approximately $2.3 million in federal and state tax credit carryforwards that originated in the tax years from 2018 through 2021 and begin expiring in 2025. These carryforwards are primarily from investments in federal and state NMTC projects. The Company expects to fully utilize these tax credit carryforwards prior to their respective expiration dates.

 

 

The Company had approximately $58.4 million in state net operating loss carryforwards that originated in the tax years 2003 through 2020 and begin expiring in 2023. A $58.4 million gross state valuation allowance has been established for all non-bank entity level state NOL carryforwards, which translates to a net $3.6 million valuation allowance in the Company’s deferred tax inventory. The impact of this valuation allowance is not material to the financial statements.

 

The tax benefit of a position taken or expected to be taken in a tax return should be recognized when it is more likely than not that the position will be sustained on its technical merits.  The liability for unrecognized tax benefits was immaterial as of December 31, 2021, 2020 and 2019. The Company does not expect the liability for unrecognized tax benefits to change significantly during 2022. The Company recognizes interest and penalties, if any, related to income tax matters in income tax expense, and the amounts recognized during 2021, 2020 and 2019 were insignificant.

The Company and its subsidiaries file a consolidated U.S. federal income tax return, as well as filing various state returns. Generally, the returns for years prior to 2018 are no longer subject to examination by taxing authorities.